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"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich

• pyrophane 6y ago
  Sure, but I also don’t imagine these companies are standing on the sidelines while tax laws are written, pleasantly surprised to see things working out in their favor once again.
• parineum 6y ago
  All of the wages that Nike and Amazon pay are taxed though. They create commerce that is taxed at just about every turn.
  • chrischen 6y ago
    I feel like there is too much outrage fueled by a complete misunderstanding of how our tax system works right now. If corporations are taxed then there is effectively double taxation. Corporations can only spend the money on business expenses, such as paying people. However when people are paid they are being taxed already. So our current tax system taxes a corporation if they have excess money they sit on. If they spend the money on productive uses it doesn’t get taxed, but then the people who receive the money get taxed. So the headline is extremely disingenuous because if Nike had $0 taxable income it’s only because they shifted the taxable income to the CEO’s pay.
    • kelnos 6y ago
      > If corporations are taxed then there is effectively double taxation. Not really. Corporate profits are taxed, not revenue. Taxes aren't figured until salaries are already paid. > ... if Nike had $0 taxable income it’s only because they shifted the taxable income to the CEO’s pay. I'm sure it's a lot more complicated than that. Companies aren't avoiding tax by giving all excess revenue to their CEO as compensation. That wouldn't really make sense at all.
      • chrischen 6y ago
        > Not really. Corporate profits are taxed, not revenue. Taxes aren't figured until salaries are already paid. We're saying the same thing here. My point is that double taxation is avoided by figuring the taxes after salaries are paid out, which ideally would be brought to $0 because nobody wants to be double taxed. > I'm sure it's a lot more complicated than that. Companies aren't avoiding tax by giving all excess revenue to their CEO as compensation. That wouldn't really make sense at all. The CEO is just another employee. Obviously they don't just give the CEO all the extra taxable profit... Why do you think end-of-year bonuses are given out at end-of-year? Because there's taxable income on the balance sheet and if it doesn't get bonus'd to employees then it would be sent to the Trump/Biden/whomeever is president's administration as taxes. Nobody's going to give you bonus points for paying extra taxes, but if your employees get a nice bonus they might stick around or work harder at least.
    • stefan_ 6y ago
      I pay income tax, then I take some of the money leftover to buy food and pay sales tax. Was I double taxed? Where is the "complete misunderstanding"? It often feels like HN threads on big company taxes revolve around the same patterns, the people that repeat ad nauseam "but if it's legal it's legal!" and the ones that bring up double taxation as if that is some sort of tax cheat code.
      • chrischen 6y ago
        Getting rid of double taxation from corporations would essentially mean getting rid of business deductions. Which means that companies would have no extra incentives to spend their money on business expenses such hiring because they'd get taxed either ways. The corporate taxes are working fine and most companies aren't avoiding taxes so much as being incentivized to spend their profits on hiring or giving out pay raises. Think of it is coerced minimum wage increases in lieu of corporate income taxation. Double taxation on income and then on your food is just extra tax revenue, and nobody's going to stop eating because of it, though you might eat less expensive. Some places do indeed do not have taxes on basic food.
  • toomuchtodo 6y ago
    Stock compensation is taxed at a lower rate than wages, and isn’t exposed to Social Security and Medicare taxes such that wages are.
    • adventured 6y ago
      Yes it's a very blatant hole that needs to / should be fixed. There's also no reason there should be a cut-off on FICA taxation as you scale up in income. The Democrats should target those easy taxation wins (if they can stop for a moment trying to get tax cut handouts for higher income persons in their coastal cities in the form of SALT deductions; pretty hilarious to watch the Dems argue in favor of raising taxes on nearly everything that moves while simultaneously arguing that people earning six figures desperately need a tax cut - solely because it's overwhelmingly for their voters in affluent blue cities).
      • valuearb 6y ago
        There is a real reason FICA has a cap, because it's not an income tax. It's sole purpose is for a retirement & medical benefits program that was sold as fair to all when introduced. Forcing someone to pay 10X or 100X over their lifetime for the same benefits as someone else doesn't strike anyone as fair.
        • votepaunchy 6y ago
          Social Security payments are progressive but have no fixed limit, so those paying 10X or 100X would also receive higher payments.
          • valuearb 6y ago
            You can easily reach the hard cap on future SS payments while earning barely more than the median pay in the US during your career. So every dollar you contribute above that earns you nothing. Someone who contributes 100x gets nothing for that.
        • arcticbull 6y ago
  • geenew 6y ago
    True, but it must be emphasized that that tax is tax being paid _by individuals_. It is simply withheld by the corporation as a convenience. The monies are earned by the individual and paid by the individual. Corporations have no moral right to claim that as 'tax paid' in these discussions. A person earning $X for a company that pays corporate tax would have the same individual tax liability as an individual earning $X for a company that does not pay corporate tax.
    • valuearb 6y ago
      Corporations are merely shared collectives owned by groups of individuals, who pay taxes on it's earnings when they receive dividends or sell their shares.
      • tfehring 6y ago
        That's true in principle, but many of the shareholders of US corporations never pay those taxes in practice, either because they're not US residents or because they avoid capital gains taxes through tax-advantaged accounts, trusts, non-US shell corporations and SPVs, etc. To preempt one likely response to this: no, it's not appropriate for a non-US-resident shareholder of Amazon to not pay any US tax on their share of Amazon's pre-tax profit. Amazon is leveraging US-taxpayer-funded resources, including roads, the electrical grid, the military (which protects Amazon's buildings and shipping routes), arguably the educational system, etc. to generate profit, and anyone with a claim to a portion of that profit should have to help pay for those resources.
        • valuearb 6y ago
          First of all, if you want foreigners to pay U.S. income taxes when they invest capital in the U.S., I have to ask, why do we want to discourage foreign investment in the US? Amazon pays sales/gas taxes for much of what you mentioned, and it's U.S. investors, who also pay income and property taxes for the rest. Second of all, U.S. citizens absolutely do pay taxes on investment earnings. If you hold stocks in a tax deferred IRA, you pay your taxes when you take distributions and at full income tax rates, no capital gains or dividend tax breaks. That's true of any tax deferred account. Anyone "shielding" taxes in a "non-US shell corporation" is committing tax fraud. The best solution to that is to eliminate the extra layers of taxes on investing in the U.S, in one way by eliminating corporate income taxes or allowing corporations to deduct dividends as expenses. Then the benefits of hiding your investment earnings become far less, and not proportionate to the risks.
  • trentnix 6y ago
    One could argue Amazon's success is based largely on the unfair sales tax advantage it had over brick-and-mortar retailers. Brick-and-mortar retailers were compelled to pay sales tax under the penalty of law, while Amazon had a built in 6-9% since it didn't have to collect sales tax. I'm not saying that's the only reason Amazon is successful, but it absolutely played a role. My early shopping with Amazon was always of two varieties - to purchase things I couldn't find elsewhere or to save money on more expensive purchases. Only relatively recently has Amazon become the most convenient way to shop.
    • datavirtue 6y ago
      Their success is clearly based on actuating efficient communication within the company (AWS) and getting packages to the door ASAP without charging extra.
      • trentnix 6y ago
        Their recent success, sure. Amazon was around a long time when it wasn’t the convenience and cloud computing king. It was with their retail growth and the investment dollars that brought they used to build what they’ve got.
  • datavirtue 6y ago
    Yep. Don't have any idea why we are taxing businesses. They are just vehicals. People pay tax. This is just government engineering cost opacity.
  • dragonwriter 6y ago
    > All of the wages that Nike and Amazon pay are taxed though. That labor income is taxed particularly heavily (compared to generic income, which in turn is taxed extra compared to capital income) is another, and bigger, problem, yes. It doesn’t mitigate the fact that effectively untaxed corporate returns amount to potentially infinite deferral of taxes on capital accumulation on top of the low rates paid when capital gains are realized. Corporate retained profits that aren’t passed through to owners for tax purposes should be taxed, with no sheltering or protection, at the maximum marginal personal income tax rate, corporate distributions should be deductible expenses, and capital distributions and gains should be taxed as normal income to the recipient (but, to fairly treat long term gains—as well as irregular non-capital income—asset basis values should be adjusted for inflation and there should be provisions for optional advance recognition of income for tax purposes and optional deferred recognition over a period of years for windfalls. And “payroll taxes” shouldn’t be separate from personal inncome taxes; all incone regardless of source should be taxed for the programs they support and be counted for eligibility purposes (for social security specifically, additional bend points at and points beyond the current maximum should be adopted instead of the income and benefit caps.)
• yourabstraction 6y ago
  Exactly. Don't hate the player, hate the game.
• kelnos 6y ago
  Exactly. If we really think taxing corporate profits is a good idea, then let's direct our ire at our elected representatives for cutting corporate taxes and adding ways for companies to avoid paying tax. Ultimately, though, I'm not sure taxing corporate profits is all that useful. Increasing income taxes for higher earners, giving the estate tax its teeth back, and possibly implementing a wealth tax, will likely give the same (or better) results, while eliminating so much of the waste that goes into creative accounting and keeping cash and income segregated in tax jurisdictions more favorable to the company. On top of that, I would also be in favor of executive pay caps (expressed as a multiple of the average or median employee salary, or something), which could encourage companies to pay their employees better, or be stuck paying their executives worse. Incentives for reinvesting profits domestically could also help keep companies from hoarding cash.
• wayneftw 6y ago
  I would like people to form co-ops to do the same. Everything in their life can be supplied by the company. Recently I found out about a movement called Anarcho Syndicalism, so I guess I'm an anarchist? I don't know, I just want to push things to the logical conclusion so we can have some positive change.
• ineptech 6y ago
  The courts may say there's nothing sinister about it; that doesn't preclude me from saying so. * Tax avoidance by regular people is overwhelmingly accomplished by doing things that tax law subsidizes because we think they're good - home ownership, saving for retirement, etc. Wealthy people and megacorps tend to avoid tax by moving revenue between countries, leveraging campaign donations to effect beneficial changes to the law, and dragging out tax cases to reach settlements. * Giant corporations can and do avoid the entirety of their tax burden, but this option is not open to regular wage-earners, because an ad campaign for shoes is considered to be an "investment" and a parent feeding their children is not. Even in the best case (if we pretend that all of the activities used by megacorps to avoid tax are "good" in the sense of contributing to GDP) this has the effect of increasing the tax burden on individuals, because no matter how much Nike contributes to GDP it will never fix a pothole or build a fire station. * Your complaint about misdirected anger (people being mad at Nike rather than the legislature) is at best a nitpick (most people understand this and are just speaking lazily) and at worst outright false (in that the main reason megacorps pay so little tax is because of lobbying and aggressive legal action by those same megacorps). Bottom line is that these (tax avoidance by regular wage-earners like the one in the case you cited, and tax avoidance by Nike, Amazon, et al) are not equivalent, and conflating them can serve no purpose other than to justify the sins of the latter with the virtues of the former.
• cptskippy 6y ago
  The disconnect here is that the tax laws are created by politicians in the pocket of these companies. You can say it's the laws and not companies, but the companies fought/paid for those laws. So it's perfectly fine to hate those companies, just as it's perfectly fine to hate Intuit for lobbying to ensure we have a hard time filing our taxes.